The mainstream media are starting to recognize financial reality

I was surprised to see that Newsweek had published an article acknowledging the rising rate of inflation.

... the Fed ... points to the all-urban consumer price index (CPI-U) and notes that it was up only 2.7 percent in March relative to the same month a year earlier. Strip out the costs of food and energy, and 'core CPI' - the Fed’s preferred measure - is just 1.2 percent. When Google unveils its new index of online prices, it’s likely to tell a similar story.

To ordinary Americans, however, it’s not the online price of an iPad that matters; it’s prices of food on the shelf and gasoline at the pump. These, after all, are the costs they encounter most frequently. And with average gas prices hitting $3.88 a gallon last week, filling up is now twice as painful as when President Obama took office.

Sensing a threat to his hopes of reelection, the president last week called on Congress to eliminate 'unwarranted' tax breaks for oil companies and set up a Justice Department task force to investigate price gouging and fraud in the oil markets. Give me a break. The spike in gas prices is the result of Fed policy, which has increased the monetary base threefold in as many years, and a geopolitical crisis in the Middle East that the president and his advisers still haven’t gotten a handle on.

And the reason the CPI is losing credibility is that, as economist John Williams tirelessly points out, it’s a bogus index. The way inflation is calculated by the Bureau of Labor Statistics has been 'improved' 24 times since 1978. If the old methods were still used, the CPI would actually be 10 percent. Yes, folks, double-digit inflation is back. Pretty soon you’ll be able to figure out the real inflation rate just by moving the decimal point in the core CPI one place to the right.

It’s not only the BLS that speaks with a forked tongue. Members of the Council on Foreign Relations last week heard Treasury Secretary Tim Geithner say: "Our policy has been and will always be ... that a strong dollar is in the interest of the country." Fact: the dollar has depreciated relative to other currencies by 17 percent since 2009. That European vacation is going to cost nearly a fifth more than you anticipated when you booked the flights a year ago.

There's more at the link. Bold print is my emphasis.

I didn't expect this recognition of reality from one of the mainstream media's most mainstream and (blindly) financially upbeat sources. Perhaps there's hope for them yet . . . provided they can learn to carry the same recognition of reality over to other areas of their reporting.

(Of course, when the financial tsunami bearing down on us finally strikes, Newsweek and many of its peers and competitors may not survive at all . . . )

Peter